When Giving Away Your Product Or Service For Free Is A Smart Move

Annette Frey's Biscuits by Lambchop is ubiquitous across Manhattan. This entrepreneur came up with the concept of all-natural, gluten-free dog biscuits, and now they're served in open bowls in pet-friendly stores, coffee shops, restaurants and bars across the city. The establishments that carry her product either purchase the product, or offer free samples. These are people and businesses Frey chooses to invest a batch of her treats in for an introductory period in order to bring in new customers. Many of her new business opportunities develop from that initial free offering.

"Giveaways have helped introduce more people to our brand and learn what our products are all about," says Frey, whose company is also online and distributes nationally. "Once a dog has tasted our biscuits and their owners can experience their reactions, the biscuits sell themselves."

Frey is constantly reevaluating how to keep that balance as she continues to grow her business. Given the current instability of the economy, Frey has grown more prudent with her giveaways so as to do more than sustain, but actually profit.

Here are her tips for navigating that balance.

Don't give away the farm

A sample is a sample, not a lifetime commitment of free product. Those samples are coming from a PR and marketing budget, so they aren't technically free. Frey bakes those batches of biscuits herself, so her time and energy are added costs as well. She says for stores, it may cost her a few dollars for full-sized product samples, brochures and marketing materials, but that it's more money when shipping around the country. Samples for events and sponsorships range anywhere from $20 to $100 and up.

"We always want to let people try our product," says Frey. "But we've had to set up some guidelines when considering giveaways, to make sure they ultimately reach our target market."

"If it's a blogger making the request, we'll look at their Alexa rating, their demographic, how they communicate on social media sites and their general message. I look to see how in line they are with our mission," says Frey. "If it's a store, we look at their customer demographic and if their company values are in line with ours. Do they carry health products? Are there similar price points in the store? I wouldn't align myself with a company that does animal testing, or whose CEO hunts for sport, etc. If it's a donation or a sponsorship, the guidelines may loosen up a bit."

Biscuits by Lambchop maintains the following samples categories: media, veterinarians, retailers and causes. Frey allows some flexibility if the person or organization is something she sees a future with and wants to align with.

"We try and stick to a one per request policy," says Frey. "But we're flexible if it makes sense. For instance, we might send a veterinarian's office many small take-home packets for their clients. It makes more sense, from a marketing standpoint."

See beyond dollars

Even in this economy, it's not just about the numbers for Biscuits by Lambchop. Frey is always looking for long-term partnerships and understands the sacrifice in the beginning to secure those.

"As an entrepreneur in a challenging economy, you have to be flexible and embrace opportunities as they present themselves," says Frey. "Shelters and rescues ask me for samples all the time. I've made it a policy to give locally only because the shipping gets too expensive. I have relationships with local shipping places too."

"I decided to because of the good things they do as an organization," says Frey. "It was also good for me exposure wise. It's a long-term investment for future partnerships."

Be honest

People can conveniently forget that what they've gotten free comes at a price—especially when it's related to something both Frey and the lucky client love: dogs. It's great that there are people that love a product and want more and more of it, but it's a good idea to make sure they kindly understand just how lucky they've been.

"Once you set up your guidelines, it's easy to refer to them for your reasoning," says Frey. "Occasionally, you just have to tell someone you have given them the max that you have budgeted for and stick to your guns. That's not easy, but then [again], business is not easy!"

Be comfortable with your policy

If you lose a client for cutting off their free supply, the client is merely illustrating how much he or she wasn't really a customer.

"It's only hurt us when we didn't draw clear lines on free product because we weren't sure how or just weren't comfortable doing so," says Frey. "Now we can draw clear lines."

Do your own homework and legwork

Maybe right now isn't the time to hire out a fancy PR firm to get the word out on our business. Especially when you and your small business are part of a world that is (or should be) well-connected with social media sites. Online networking savvy and creativity can keep costs down. Frey is a big proponent of doing her own footwork to get results.

"Coveted media outlets are bombarded with products," says Frey. "We do our homework when reaching out to the media and then personalize our outreach in a way that helps us stand out in a packed crowd. Showing a genuine interest by personalizing our pitch and trying to anticipate what a reporter needs to get their jobs done goes a long way, especially when you don't have that big PR budget." Wikimedia